Obama's Visit: US Merchants Eyeing Indian Agriculture

08 November 2010

By Devinder Sharma

At a time when America is faced with an economic downtrend, US President Barack Obama comes calling in a few days hoping that India will bail him out of the seemingly unending economic crisis. With a huge business team – more than 200 top business chiefs -- accompanying him, US is expecting to increase it exports to India by at least 400 per cent.

Food and Agriculture is one of the major thrust areas where President Obama is likely to make a strong pitch.

In 2006, the last time the US President visited India, George Bush had formally launched the Rs 1000-crore Indo-US Knowledge Initiative in Agricultural Research and Education, when he made a quick visit to Hyderabad. For years later, in 2010, the Indo-US Knowledge Initiative (KIA) appears to be almost in a cold storage, but after having successfully promoted unwanted US technologies on several farm universities.

This followed from the previous visit of prime minister Manmohan Singh to Washington in 2005. Addressing a joint session of the US Congress during his visit, prime minister had said: "The Green Revolution lifted countless millions above poverty.... I am very happy to say that U.S. President George Bush and I have decided to launch second generation of India-US collaboration in agriculture."

Following the agreement, a team of Indian agricultural scientists visited US in December 2005 to work out the modalities of the programme. It was followed by a return visit by US agricultural scientists, and the entire exercise has been kept confidential and prepared in a hush-hush manner.

It was feared that the Indo-US agricultural treaty would bring Indian agriculture under the direct control of US Corporate houses. The dominance of the American agri-business became clear when it became known that the US supermarket giant Wal-Mart, food giant Cargill and the seed multination Monsanto were on the board of the Indo-US Initiative. All these companies are now well entrenched, ready for the next phase.

President Obama is likely to re-energise the dead Indo-US Knowledge Initiative in Agriculture. Since the agreement is facing un-surmountable hurdles because of the inability of the Indian Council for Agricultural Research (ICAR) to pay for staff travels and technologies being imported, it is likely that the US would push through more collaboration in agricultural scientific research through the US-India Strategic Dialogue.

While collaboration in farm research will pave the way for the entry of US agribusiness multinationals, especially technology companies like Monsanto and Du Pont, the thrust of the US talks is going to be on opening up of the food retail and insurance sector. A few weeks back, President Obama had expressed hope that India would allow FDI in big retail. The G-20 Summit in Toronto some months back had also in its final communiqué decided to lift all hurdles to allow big retail to operate.

As a welcome gesture, Prime Minister Manmohan Singh is likely to announce the formal approval for FDI in big retail. It was primarily to justify the need for FDI in retail that the Department of Industrial Policy and Promotion (DIPP) had come out with a highly flawed discussion paper to indicate government's rethinking on the controversial subject. "The agriculture sector needs well functioning markets to drive growth, employment and economic prosperity in rural areas," the discussion paper said. A number of economists and researchers joined the chorus singing praise for the role the supermarkets can play.

Despite the destruction of farming globally by the supermarkets, the Ministry for Commerce and Industry is gung-ho about allowing foreign direct investment in multi-brand retailing, which means allowing the big players like Wal-Mart and Tesco to swamp the Indian market. Agriculture Minister Sharad Pawar has time and again spelt out the need to allow FDI in big retail. Ministry for Commerce had even set up a small committee to prepare the ground for its entry.

If the supermarkets were so efficient and provided dynamism, I would like to know why the US is providing a massive subsidy for agriculture. After all, the world biggest retail giant Wal-mart is based in America and it should have helped American farmers to become economically viable. But it did not happen. American farmers have instead been bailed out by the government, providing a subsidy of Rs 12.50 lakh-crore between 1995 and 2009, and this includes direct income support.

The supermarkets have therefore failed the American farmers.

India is therefore importing a failed economic model, which otherwise would help the economic recovery of America.

Entry of the big US food retail signals the complete corporate takeover of Indian agriculture. At a time when the government is busy laying out the infrastructure for the 2nd Green Revolution, which means strengthening agribusiness, a plethora of Indian laws on water, seeds, pesticides, fertilisers, land use policy, contract farming, biodiversity, intellectual property, biotechnology and genetic engineering have either been suitably amended (or are in the process) to facilitate the entry of multinational companies. One of the major thrust areas where Manmohan Singh is expected to assure President Obama of his un-stinted support is the introduction of the controversial genetically engineered crops.

India has already prepared a bill – National Biotechnology Regulatory Authority bill -- awaiting introduction in parliament that allows for a single-window clearance for genetically-modified crops, something that even the US does not allow within its own borders.

In the last few weeks, multinational companies like Monsanto, Wal-Mart and also the US Grain Council has been making a fervent pitch to life the barriers that have come in the way of US exports to India. It is not without reason that the Ministry of Commerce has been seeking fast conclusion of the Doha round of the World Trade Organisation. In the last few weeks, the US has forced Russia to cut down its agricultural subsidies by 50 per cent as a pre-requisite for its entry as a member of the WTO. It is also asking India, Brazil and China to further reduce the industrial tariffs.

India is expected to assure President Obama that it will not press for the reduction of the massive US farm subsidies, especially in cotton, but will provide more market access to US farm goods. All non-trade barriers are being gradually removed, and the US will find it easy to rebuild its sagging economy on the strength of the Indian market.

Indian agriculture provides a sustained market for the US companies. What is good for the commercial interest of the US companies is not necessarily going to be productive for Indian farmers. But then, Manmohan Singh has time and again talked of shifting 70 per cent of the rural population into the urban centres. Bringing agriculture under the yoke of the US business and industry will hasten this population transfer.



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